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India: Input tax credit and prices; tax sparing credit rules

India: Input tax credit and prices; tax sparing credit

The KPMG member firm in India has prepared reports about the following tax developments (read more at the hyperlinks provided below).


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  • Input tax credit denial, implications for price increase: India’s national authority with jurisdiction over anti-profiteering rules issued an order that a company can increase its prices only to the extent of a denied  input tax credit. Any price increase above the amount of the denied input tax credit would be deemed to be a denial of the benefit of a tax reduction. The case is: Jubilant Food Work Ltd. Read a February 2019 report [PDF 817 KB]
  • Health insurance for employees’ parents, not a supply of services: India’s Authority for Advance Ruling, Maharashtra concluded that because the taxpayer was not in the business of providing insurance services, the reimbursement of expenses attributable to the health insurance of employees’ parents was not a supply of services. The case is: Posco India Pune Processing Centre Pvt. Ltd. Read a February 2019 report [PDF 830 KB]
  • Tax sparing credit under India-Thailand income tax treaty: The Delhi Bench of the Income-tax Appellate Tribunal observed that concept of a “tax sparing credit” (a credit in the resident country for taxes “spared” in the source country under an incentive program of the source country) applied in the taxpayer’s situation—but only if the dividend income received by taxpayer was taxable to the taxpayer under the tax laws of Thailand and an exemption from tax was available to the taxpayer under Thai tax law. Only then could the taxpayer claim a credit of such taxes in Thailand. The case is: Polyplex Corporation Ltd. Read a February 2019 report [PDF 891 KB]

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